Recent bullish land bids by developers have prompted the Government to raise development charge (DC) rates for non-landed residential use by 22.8 per cent on average, it announced yesterday. This compares with the 13.8 per cent rise at the last revision six months ago, and is the biggest increase since September 2007, when the rate soared by an average of 57.8 per cent.

DC rates for commercial use are being increased by an average of 2.7 per cent - lower than the 3.8 per cent rise in the previous round.

DC is payable for enhancing the use of some sites or to build bigger projects on them.

The new rates apply until Aug 31.

The Ministry of National Development (MND) consults with the Chief Valuer to revise the rates on March 1 and Sept 1. They are based on an assessment of land values and take into consideration recent transactions. DC rates are stated according to use groups across 118 geographical sectors in Singapore.

The MND said yesterday that DC rates remain unchanged for landed residential and industrial uses, as well as the use groups that cover hotel/hospital, place of worship/ civic and community institution, and three other use groups.

Rates for non-landed residential use have risen in 116 of the 118 geographical sectors by between 12 per cent and 38 per cent, with no change to the remaining two sectors.

Cushman & Wakefield research director Christine Li said: "The DC revision is a clear reflection of the escalating residential land prices paid by land-starved developers at both state tenders and collective sales."

Analysts say the rate hike in Sector 19 - around the River Valley Road area - was due to the record price for 99-year leasehold private residential land for a site in Jiak Kim Street at a state tender that closed in December.

"The steep increase in Sectors 23 (Oxley and Orchard roads area) and 34 (around Sophia Road) is most likely due to the near-record price paid (of $1,722 psf ppr) for the Handy Road Government Land Sales site last month," said Ms Li.

Property consultants generally do not expect the rate hikes to dampen the collective sale wave.

JLL head of Singapore research and consultancy Tay Huey Ying said: "Many developers have secured only one site or none at all and there will still be demand for sites at this early stage of recovery.

"Nonetheless, the sharp increase in DC rates could widen the buyer and seller price expectations for sites that attract significant development charge levy, and this could lead to more sites experiencing protracted sales periods."

The MND also announced that commercial use DC rates are going up in 41 of the 118 geographical sectors by between 4 per cent and 16 per cent. There is no change to the rates in the remaining 77 sectors.